Google and Apple Will Compete For “Undecideds”

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Google and Apple, two main parties on the smartphone market, are continuously fighting for consumers especially those who have not yet decided which OS they want to have in their next smartphone. According to Nielsen survey in July 2011, these ‘undecideds’ will be the customers which manufacturers will be hoping to win over. It is interesting that late adopters are least sure among likely smartphone upgraders about their next phone platform.

According to the survey, now about 40% Americans 18+ have smartphones. Android leads with 40% share of OS platform and iOS follows with 28%. Compared to the Nielsen's survey in June 2011, Android increased the share by one percent and iOS growth fell short of the expectations. The BlackBerry lost one percent share and now takes nineteen share of the market.

Among customers that are going to buy a new smartphone next year, one third would choose an iPhone and another third would opt for Android. This Android-iOS duopoly leaves other smartphone manufacturers with no option but to compete for the remaining 33 percent of consumers.

As Asymco’s Horace Dediu forecasted, Smartphone will continue to drive feature phones and dump phones out of the market.

I don’t see non-smart devices being interesting to vendors in the near term. Each additional dumb phone added to a portfolio will decrease a company’s operating margin. The market dynamics are such that I think non-smart phones will disappear entirely from branded portfolios in 3 to 5 years.

According to IHS iSuppli’s report, revenue from microelectromechanical system in mobile communications devices and consumer electronics will increase by 37 percent this year due to growing demand for smartphones and tablets. Also they forecasts that by 2015 sales of smartphones will outstrip dump phones that currently make up about two-thirds of all phone sales.